Correlation Between PKSHA TECHNOLOGY and AAC TECHNOLOGHLDGADR

Can any of the company-specific risk be diversified away by investing in both PKSHA TECHNOLOGY and AAC TECHNOLOGHLDGADR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PKSHA TECHNOLOGY and AAC TECHNOLOGHLDGADR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PKSHA TECHNOLOGY INC and AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on PKSHA TECHNOLOGY and AAC TECHNOLOGHLDGADR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PKSHA TECHNOLOGY with a short position of AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of PKSHA TECHNOLOGY and AAC TECHNOLOGHLDGADR.

Diversification Opportunities for PKSHA TECHNOLOGY and AAC TECHNOLOGHLDGADR

0.77

Correlation Coefficient

PKSHA TECHNOLOGY  AAC TECHNOLOGHLDGADR

Poor diversification

The 3 months correlation between PKSHA and AAC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR and PKSHA TECHNOLOGY is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PKSHA TECHNOLOGY INC are associated (or correlated) with AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and AAC TECHNOLOGHLDGADR go up and down completely randomly.

Pair Corralation between PKSHA TECHNOLOGY and AAC TECHNOLOGHLDGADR

Assuming the 90 days horizon PKSHA TECHNOLOGY INC is expected to under-perform the AAC TECHNOLOGHLDGADR. But the stock apears to be less risky and, when comparing its historical volatility, PKSHA TECHNOLOGY INC is 1.42 times less risky than AAC TECHNOLOGHLDGADR. The stock trades about -0.22 of its potential returns per unit of risk. The AAC TECHNOLOGHLDGADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  436.00  in AAC TECHNOLOGHLDGADR on October 5, 2024 and sell it today you would earn a total of  12.00  from holding AAC TECHNOLOGHLDGADR or generate 2.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

PKSHA TECHNOLOGY INC  vs.  AAC TECHNOLOGHLDGADR

PKSHA TECHNOLOGY INC

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days PKSHA TECHNOLOGY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, PKSHA TECHNOLOGY reported solid returns over the last few months and may actually be approaching a breakup point.

AAC TECHNOLOGHLDGADR

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days AAC TECHNOLOGHLDGADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, AAC TECHNOLOGHLDGADR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PKSHA TECHNOLOGY and AAC TECHNOLOGHLDGADR

The main advantage of trading using opposite PKSHA TECHNOLOGY and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PKSHA TECHNOLOGY position performs unexpectedly, AAC TECHNOLOGHLDGADR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AAC TECHNOLOGHLDGADR will offset losses from the drop in AAC TECHNOLOGHLDGADR's long position.

The idea behind PKSHA TECHNOLOGY INC and AAC TECHNOLOGHLDGADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.